Cameron warns Obama over criticising BP

Britain’s Prime Minister David Cameron talks to U.S. President Barack Obama on the phone in his office at his official country residence of Chequers outside London June 12, 2010.

June 13, 2010

David Cameron last night issued a veiled warning to President Barack Obama not to undermine BP’s “economic importance” to Britain and the United States, as the two men held crisis talks over the Gulf of Mexico oil spill disaster.

At the end of a tense week in transatlantic relations, the Prime Minister and US President tried to calm tensions in a 30-minute phone call between the Oval Office and Chequers.

Mr Cameron and President Obama insisted the special relationship remained strong, but it was clear the difficult subject of BP’s value as a FTSE 100 standard-bearer undermined by White House pressure was broached.

In return, the President maintained pressure on BP by telling Mr Cameron that the company must pay “tens of thousands” of economic claims for the oil spill and that the “large, wealthy company lives up to its obligations”.

Tensions threatened to harm the special relationship after President Obama last week stepped up pressure on BP over the environmental catastrophe, including his reference to “British Petroleum”, and his warning that he would have “fired” BP’s chief executive, Tony Hayward.

In a fresh development, it emerged that Mr Hayward has stepped up security around his family amid fears that they might be targeted over his role in the crisis.

Mr Obama has also made clear that BP must meet the financial cost of the disaster – which would threaten its ability to continue as a company.

The BP board, which meets tomorrow, is under US pressure to suspend dividend payments, threatening UK pension funds. During yesterday’s talks, Mr Cameron “stressed the economic importance of BP to the UK, US and other countries”, according to a statement released by No 10, making clear the Prime Minister believes BP’s financial position is being put at risk by US rhetoric.

The phone call came hours before England’s first World Cup match with the US. The two men discussed the football – with President Obama challenging Mr Cameron to a wager on the outcome, with the loser paying in beer. Yet the light-hearted bet did little to calm concerns that the crisis still weighs heavy on the special relationship. The Downing Street statement was couched in diplomatic language, but Mr Cameron’s stressing the company’s “economic importance” to both Britain and the US underlined Britain’s robust line on the issue.

Downing Street added: “The Prime Minister expressed his sadness at the ongoing human and environmental catastrophe in Louisiana. The President and Prime Minister agreed that BP should continue to work intensively to ensure that all sensible and reasonable steps are taken as rapidly as practicable to deal with the catastrophe.

“President Obama said to the Prime Minister that his unequivocal view was that BP was a multinational global company and that frustrations about the oil spill had nothing to do with national identity.

“The President and Prime Minister reaffirmed their confidence in the strength of the US-UK relationship.”

Conservative MP Richard Ottaway, chairman of the Foreign Affairs Committee, told the BBC: “We do have to ask ourselves: is it for the US President to interfere in the operations of an international overseas company?”

The Labour leadership candidate and shadow Energy and Climate Change Secretary Ed Miliband said: “We all – not just America – must dramatically reduce our voracious appetite for oil, so that we are not forced to keep drilling ever more deeply under water. If we are serious about alternative energy sources, not only can we create thousands of highly skilled jobs, but we can avoid another disaster like the one that is still going on off the Gulf Coast.

“On the immediate crisis, rather than pointing fingers, a proper investigation must establish the responsibilities of BP, the other private companies involved and the American regulatory authorities. Regulators and corporations must act responsibly to protect the public interest.”

Mr Cameron was under pressure to defend the company after the tough rhetoric from President Obama.

It emerged last night that senior US politicians are pushing Mr Obama to seek $100bn in damages against BP for the disaster – which would almost certainly see BP go bankrupt.

BP’s board will meet tomorrow to decide whether to bow to White House demands to suspend dividend payments, which are vital to UK pension funds.Mr Cameron will meet President Obama for the first time since becoming Prime Minister at the G8 summit in Canada later this month, when it is likely the crisis will still be dominating international relations. Mr Cameron will then pay a visit to Washington next month.

The oil spill crisis is the first major international test for Mr Cameron.

Even a month ago, top executives at BP headquarters were complaining privately to reporters about what they saw as an unwarranted level of hostility to the company in Washington.

But behind Mr Obama’s political theatrics, a sober reality remains: the US government remains locked in an unhappy partnership with BP to bring this catastrophe under control.

Ten days ago the White House said with great bravado that it had had enough taking part in daily press conferences with BP. Thad Allen, the Coast Guard admiral who has become the point-man on the US response, would from that day be briefing alone. If this was meant to signal the administration’s breaking free from BP, few believed it. Federal and BP personnel are no longer briefing together, but visit the Houston HQ where the command centre is housed and you find rooms filled by BP and federal folk toiling together, day in and day out.

There are more important historical reasons why BP has been every bit as much American as it has British for more than a decade. In 1998, it merged with the giant American energy company Amoco, acquiring, among other things, that company’s already extensive Gulf of Mexico drilling operations.